When a linchpin of the national economy weakens and gets bent out of shape, that's news, top news.

If the pin doesn't hold its wheel -- a wheel that spins a significant share of the nation's production and consumption of goods and services into economic wealth and growth -- that wheel could slip from its axle and send the economy careening into recession.

Which is why the Associated Press named the "Top Biz News of 2006: Housing's Decline".

During the first half of the decade, housing cemented its position as a cornerstone of the economy's foundation. Housing, luckily for the economy, took over from dot com technology's spontaneous combustion to become "the psychological equivalent of gold" during the dawn of the new Millennium.

Beginning in the early 2000s, housing headed for the stratosphere, fueled early by those who moved quick enough to trade in fading Wall Street stocks for Main Street holdings.

Favorable tax laws, high-leverage loan creativity, baby boomers buying seconds and day traders who became housing market speculators all also gave the residential realty rocket orbital thrust.

The market was so hot for a while, condo speculation (along with a concentration of high-end condos in some markets), drove up the national median condo price beyond that of single-family detached homes, according to the National Association of Realtors.

Last year, however, accelerated home price appreciation proved unsustainable, sales slipped, speculators split, renters stayed put, builders bolted, foreclosures reached historic proportions in some demographic segments and the inflated bubble of a housing market began to reenter the atmosphere.

It was the sudden reversal of fortunes that led Associated Press' newspaper and broadcast editors to put the housing market at the top of the heap of business stories for 2006, according to the news service.

"At the housing market's peak, buyers rushed to open houses, blank checks in hand. Lenders gave big-money mortgages to people who could barely afford their monthly payments. That ended in 2006, when home builders scuttled projects, walked away from land they'd hoped to develop and would-be buyers canceled orders," reported AP's Ellen Simon.

The story trumped the high energy price (which, ironically, impacts housing costs) story which had been the top business news story for 2004 and 2005.

"Moody's Economy.com, a private research firm, projected that the median sales price for an existing home will decline in 2007 by 3.6 percent -- the first decline for an entire year in U.S. home prices since the Great Depression," Simon reported.

Other stories at the top included others that could have an impact on the housing market, including, at No. 6, the federal reserve halting rate hikes in light of a soft economy and, at No. 5, the Iraq War's impact on oil prices.

Other top stories included convictions of ENRON CEOs; backdating stock options scandals; auto industry woes; gas prices; Hewlett Packard spying; China's economy; Google stock and YouTube acquisition; sale of Knight Ridder Inc. newspaper chain and deepwater oil finds off the coasts of Louisiana and Texas.

What's in store next for housing is a matter of contention. Some experts say 2006 was the end of the downturn and others say it's just the beginning.

Apparently the housing market is as tough to call as is the rest of the economy, with both sending mixed signals.

Historically, recession follows a sharp housing downturn, but AP reports economists it queried put the chance of a recession at only slightly better than 1 in 5.

Most economists predict economic growth in the New Year at 2 to 3 percent.

New-home starts are expected to have fallen 17.7 percent in 2006 but drop only 9.4 percent next year, according to the National Association of Realtors. Existing-home sales are expected to have fallen 8.6 percent this year and drop 1 percent in 2007.

Mortgage interest rates remained affordable in 2006, rarely getting near the 7 percent some experts predicted. The holidays proved consumers are still spending, even if they aren't buying big ticket items. That's an indication employment remains strong, even without substantial income advances.

Lower prices in building materials followed by what's expected to be an upturn in remodeling and home improvement this spring also may be telling indicators.

The consuming market likely hasn't bailed on home buying, but is simply dry docking, battening the hatches and weathering the storm until it's a good time again to set sail on smoother seas.

The economy is counting on it.

Published: January 3, 2007

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.